FY12 has been witnessing a drop in export sales, whereas domestic dispatches have been rising. The latest numbers released by the All Pakistan Cement Manufacturers Association (APCMA) uptil January FY12 show a continuation of this trend. On a year-on-year basis, local dispatches improved by 7 percent from 12 million tons in 7MFY11, while during January 2012 alone, local dispatches improved by nearly 9 percent to 1.9 million tons versus January 2011. While the surge in local sales was witnessed in both the northern and southern regions, the pace of growth was markedly higher in the southern region. Industry sources claim that the surge in domestic sales was led by an increase in house construction in both rural and urban areas. The decline in export dispatches was primarily due to a disincentive for local players to sell to markets abroad where prices were much lower. Given better retention prices in local markets, domestic cement manufacturers find it more feasible to sell locally than to export markets. It was primarily exports-via-sea that saw a considerable slump in dispatches on a year-on-year basis because of the absence of lucrative prices in the GCC countries. In effect, industry sources claim that northern players have nearly stopped exporting via sea because of the greater costs involved against lower prices for the product. Yet, exports to Afghanistan and India improved during 7MFY12, with reconstruction work in war-ridden Afghanistan explaining growth in the former, and the latter explained by a renewal of Bureau of Indian Standards (BIS) certificates for cement manufacturers in the latter half of next year. However, on a month-on-month basis, exports to Afghanistan decreased vis-à-vis December FY12 because of the extreme winter conditions this year affecting transport routes to the country. The winter effect of January was also evident in the month-on-month decline in local dispatches from the north. Industry players expect the winter effect to continue through February, with a revival in sales expected by March this year. Going forward, on the export side, while exports via sea are likely to stay subdued, an increase in sales to India may be seen; thanks to the likelihood of opening up road routes to India by the next month or two. At the same time, exports to Afghanistan are also expected to increase once weather conditions become favourable. As far as local dispatches are concerned, reconstruction work after the Sindh floods and an increase in house construction is likely to keep up domestic demand. Overall, FY12 will probably see the cement sector supported more by the local front than by exports.
===================================================== CEMENT DISPATCHES - PAKISTAN ===================================================== (mn tons) 7MFY12 YoY Jan FY12 MoM ===================================================== Local 12.9 7% 2.0 -4% North 10.5 5% 1.5 -8% South 2.4 17% 0.4 13% Exports 5.1 -4% 0.6 -9% Afghanistan 2.7 12% 0.2 -33% India 0.4 48% 0.05 2% Other, clinker (sea) 1.9 -24% 0.3 27% TOTAL 17.9 4% 2.5 -5% ----------------------------------------------------- Source: APCMA =====================================================
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